SINGAPORE--(BUSINESS WIRE)--Sea Limited (NYSE: SE) (�Sea� or the �Company�) today announced its financial results for the fourth quarter and full year ended December 31, 2020.

Fourth Quarter 2020 Highlights

• Group
  • Total GAAP revenue was US$1.6 billion, up 101.6% year-on-year.
  • Total gross profit was US$533.7 million, up 101.5% year-on-year.
  • Total adjusted EBITDA¹ was US$48.7 million compared to US$(104.9) million for the fourth quarter of 2019.

• Digital Entertainment
  • Bookings² were US$1.0 billion, up 111.1% year-on-year.
  • Adjusted EBITDA¹ was US$663.5 million, up 149.1% year-on-year.
  • Adjusted EBITDA represented 65.5% of bookings for the fourth quarter of 2020, compared to 55.5% for the fourth quarter of 2019.
  • GAAP revenue was US$693.4 million, up 71.6% year-on-year.
  • Quarterly active users (�QAUs�) reached 610.6 million, an increase of 72.1% year-on-year.
  • Quarterly paying users grew by 119.5% year-on-year to 73.1 million, and represented 12.0% of QAUs for the fourth quarter compared to 9.4% for the same period in 2019.
  • Average bookings per user were US$1.7, compared to US$1.4 for the fourth quarter of 2019.
  • Our self-developed global hit game, Free Fire, was the most downloaded mobile game globally for 2020, according to App Annie³, maintaining this leading position for a second consecutive year.
  • Free Fire continued to be the highest grossing mobile game in Latin America and in Southeast Asia for the fourth quarter and for the full year of 2020, according to App Annie³. Free Fire has maintained this leading position for the past six consecutive quarters.
  • Free Fire was also the highest grossing mobile game in India for the fourth quarter and for the full year of 2020, according to App Annie³.
  • Free Fire related content recorded over 72 billion view counts across YouTube globally in 2020, making Free Fire the most viewed mobile-only video game globally on YouTube for both 2019 and 2020. It was also the third most viewed among all video games on YouTube in 2020.
  • Our esports and community-building efforts continued to attract significant followings in the fourth quarter. Free Fire esports tournaments hosted during the quarter have accumulated over 170 million online views to date.

• E-commerce
  • GAAP revenue was US$842.2 million, up 178.3% year-on-year.
  • GAAP revenue included US$627.6 million of GAAP marketplace revenue⁴, up 175.4% year-on-year, and US$214.6 million of GAAP product revenue⁵, up 187.1% year-on-year.
  • Gross orders totaled 1.0 billion, an increase of 134.6% year-on-year.
  • Gross merchandise value (�GMV�) was US$11.9 billion, an increase of 112.5% year-on-year.
  • Adjusted EBITDA¹ was US$(427.5) million compared to US$(306.2) million for the fourth quarter of 2019. Adjusted EBITDA loss per order decreased by 41.4% year-on-year to US$0.41, compared to US$0.70 for the fourth quarter of 2019.
  • In Indonesia, where Shopee is the largest e-commerce platform, it registered over 430 million orders for the market in the fourth quarter, or a daily average of around 4.7 million orders, an increase of over 128% year-on-year. Shopee also ranked first in Indonesia by average monthly active users, total time spent in app on Android, and downloads, in the Shopping category for the fourth quarter and for the full year of 2020, according to App Annie³.
  • Both in Southeast Asia and in Taiwan, Shopee ranked first in the Shopping category by average monthly active users, total time spent in app on Android, and downloads, for the fourth quarter and for the full year of 2020, according to App Annie³.
  • Shopee was also the third most downloaded app globally in the Shopping category for the full year of 2020, according to App Annie³.
  • Shopee is building ever-stronger brand affinity with our communities. Shopee ranked first in YouGov�s �Best APAC Buzz Rankings 2020� and ranked eighth in YouGov�s �Best Global Brands 2020�. Shopee represents one of the only two e-commerce brands in YouGov�s top 10 global brand rankings.

Full Year 2020 Highlights

• Group
  • Total GAAP revenue was US$4.4 billion, up 101.1% year-on-year.
  • Total gross profit was US$1.3 billion, up 123.0% year-on-year.
  • Total adjusted EBITDA¹ was US$107.0 million compared to US$(178.6) million for the full year of 2019.

• Digital Entertainment
  • Bookings² were US$3.2 billion, up 80.3% year-on-year, exceeding our recently raised full-year guidance for 2020.
  • Adjusted EBITDA¹ was US$2.0 billion, up 94.0% year-on-year.
  • Adjusted EBITDA represented 62.2% of bookings for the full year of 2020, compared to 57.8% for the full year of 2019.
  • GAAP revenue was US$2.0 billion, up 77.5% year-on-year.

• E-commerce
  • GAAP revenue was US$2.2 billion, up 159.8% year-on-year.
  • GAAP revenue included US$1.6 billion of GAAP marketplace revenue⁴, up 155.2% year-on-year, and US$575.4 million of GAAP product revenue⁵, up 173.1% year-on-year.
  • GAAP revenue plus sales incentives net-off was US$2.5 billion, exceeding our recently raised full-year guidance for 2020.
  • Gross orders totaled 2.8 billion, an increase of 132.8% year-on-year.
  • Gross merchandise value (�GMV�) was US$35.4 billion, an increase of 101.1% year-on-year.
  • Adjusted EBITDA¹ was US$(1.3) billion compared to US$(1.0) billion for the full year of 2019. Adjusted EBITDA loss per order decreased by 46.5% year-on-year to US$0.46, compared to US$0.86 for the full year of 2019.

Digital Financial Services Update

In the fourth quarter, we continued to see strong growth in the adoption of SeaMoney�s offerings. Our mobile wallet total payment volume exceeded US$2.9 billion for the quarter and US$7.8 billion for the full year of 2020. Moreover, quarterly paying users for our mobile wallet services surpassed 23.2 million in the fourth quarter with monthly paying users in Indonesia surpassing 10 million during the quarter.

We also continued to expand our suite of online and offline third-party use cases and partnerships. We recently expanded our partnership with Google to offer our mobile wallet as a payment option for the Google Play Store in Indonesia, following our partnership with Google in Thailand from March 2020.

Other Updates

Sea has acquired 100% of Composite Capital Management (�Composite�), a Hong Kong-licensed global investment management firm. Composite was founded and is led by David Ma. Its team has a demonstrated track record of successful, long-term investing, and a deep understanding of industry trends and relevant sectors globally.

Concurrent with this acquisition, we are establishing Sea Capital, a platform to manage Sea�s overall investment efforts. David Ma will serve as the Chief Investment Officer of Sea Capital and will report directly to Sea�s Chairman and Group Chief Executive Officer, Forrest Li. Sea Capital will focus on partnering with entrepreneurs using technology to better serve consumers and small businesses. Through Sea Capital, we intend to invest into and support the growth of our broader ecosystem to create value for our users, business partners, and communities. In line with this commitment, we are allocating an initial US$1 billion to be deployed by Sea Capital over the next few years. We believe the addition of the Composite team and the establishment of Sea Capital will further enhance our investment and capital allocation capabilities in support of Sea�s long-term growth strategies.

Separately, Dr. Yan Shuicheng has joined Sea as Group Chief Scientist to build and lead Sea AI Labs. Dr. Yan is a leading expert in the field of artificial intelligence, with a particular focus on computer vision, machine learning and multimedia analysis. He is an ACM Fellow and Fellow of Academy of Engineering Singapore.

Sea AI Labs intends to attract and collaborate with top talent in artificial intelligence with the goal of exploring and developing long-term insights and technologies related to our existing businesses and new opportunities beyond. Dr. Yan and Sea AI Labs will strengthen our capabilities in innovation and research, in line with our commitment to advancing technology to drive the development of the digital economy across our regions.

Guidance

For the full year of 2021, we currently expect bookings for digital entertainment to be between US$4.3 billion and US$4.5 billion. The midpoint of the guidance represents an increase of 38.1% from 2020.

We also expect GAAP revenue for e-commerce to be between US$4.5 billion and US$4.7 billion. The midpoint of the guidance represents an increase of 112.3% from 2020.

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¹ For definitions of total adjusted EBITDA and adjusted EBITDA for digital entertainment and e-commerce segments, please refer to the �Non-GAAP Financial Measures� section.

² GAAP revenue for the digital entertainment segment plus change in digital entertainment deferred revenue. This operating metric is used as an approximation of cash spent by our users in the applicable period that is attributable to our digital entertainment segment.

³ Rankings data for App Annie is based on combined data from the Google Play and iOS App Stores, unless otherwise stated. Southeast Asia rankings are based on Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam. Latin America rankings are based on Argentina, Brazil, Chile, Colombia, Mexico, and Uruguay.

⁴ GAAP marketplace revenue mainly consists of transaction-based fees and advertising income and revenue generated from other value-added services.

⁵ GAAP product revenue mainly consists of revenue generated from direct sales.

Unaudited Summary of Financial Results

(Amounts are expressed in thousands of US dollars �$� except for per share data)

⁽¹⁾ This was primarily due to fair value loss of $472.9 million on the 2017 convertible notes as our share prices significantly exceeded the conversion prices of the 2017 convertible notes.

⁽²⁾ For a discussion of the use of non-GAAP financial measures, see �Non-GAAP Financial Measures.�

⁽³⁾ Unallocated expenses are mainly related to share-based compensation and general and corporate administrative costs such as professional fees and other miscellaneous items that are not allocated to segments. These expenses are excluded from segment results as they are not reviewed by the Chief Operating Decision Maker (�CODM�) as part of segment performance.

Three Months Ended December 31, 2020 Compared to Three Months Ended December 31, 2019

Revenue

Our total GAAP revenue increased by 101.6% to US$1.6 billion in the fourth quarter of 2020 from US$777.2 million in the fourth quarter of 2019. The increase was mainly driven by the growth in each of the segments detailed as follows:

• Digital Entertainment: GAAP revenue increased by 71.6% to US$693.4 million in the fourth quarter of 2020 from US$404.1 million in the fourth quarter of 2019. This increase was primarily due to the increase in our active user base as well as the deepened paying user penetration, and in particular, the continued success of our self-developed game Free Fire.

• E-commerce and other services: GAAP revenue increased by 121.4% to US$656.6 million in the fourth quarter of 2020 from US$296.5 million in the fourth quarter of 2019. This increase was primarily driven by the growth of our e-commerce marketplace, and positive developments in each of our marketplace revenue streams � transaction-based fees, value-added services, and advertising. It is a result of our commitment to continuously enhance our service offerings as we seek to create greater value for our platform users.

• Sales of goods: GAAP revenue increased by 182.7% to US$216.6 million in the fourth quarter of 2020 from US$76.6 million in the fourth quarter of 2019, primarily due to the increase in our product offerings.

Cost of Revenue

Our total cost of revenue increased by 101.6% to US$1.0 billion in the fourth quarter of 2020 from US$512.4 million in the fourth quarter of 2019.

• Digital Entertainment: Cost of revenue increased by 49.8% to US$208.4 million in the fourth quarter of 2020 from US$139.1 million in the fourth quarter of 2019. The increase was largely in line with revenue growth in our digital entertainment business. Improvement in gross profit margins was largely due to higher revenue contribution from our self-developed game.

• E-commerce and other services: Cost of revenue for our e-commerce and other services segment combined increased by 107.6% to US$611.6 million in the fourth quarter of 2020 from US$294.7 million in the fourth quarter of 2019. The increase was primarily due to higher expenses associated with our logistics and other value-added services that we provide to our users, and other costs incurred in line with the growth of our e-commerce marketplace. Improvement in gross profit margins was mainly due to take-rate growth as we continue to roll out tools to better serve our users� needs.

• Cost of goods sold: Cost of goods sold increased by 170.9% to US$212.8 million in the fourth quarter of 2020 from US$78.6 million in the fourth quarter of 2019. The increase was largely in line with the increase in our product offerings.

Other Operating Income

Our other operating income increased by 1,108.6% to US$72.7 million in the fourth quarter of 2020 from US$6.0 million in the fourth quarter of 2019. The increase in our other operating income was mainly due to the rebates from e-commerce related logistic services provided by third parties.

Sales and Marketing Expenses

Our total sales and marketing expenses increased by 94.7% to US$665.2 million in the fourth quarter of 2020 from US$341.7 million in the fourth quarter of 2019. The table below sets forth the breakdown of the sales and marketing expenses of our major reporting segments. Amounts are expressed in thousands of US dollars (�$�).

• Digital Entertainment: Sales and marketing expenses increased by 37.4% to US$61.2 million in the fourth quarter of 2020 from US$44.5 million in the fourth quarter of 2019. The increase was primarily due to higher online marketing costs as we continue to deepen the engagement with our gaming community.
• E-commerce: Sales and marketing expenses increased by 72.1% to US$438.5 million in the fourth quarter of 2020 from US$254.7 million in the fourth quarter of 2019. The increase in marketing expenses was primarily attributable to the ramping up of marketing incentives and brand marketing efforts, as we continue our investments to fully capture the opportunities in our markets.
• Digital Financial Services: Sales and marketing expenses increased by 292.4% to US$152.4 million in the fourth quarter of 2020 from US$38.8 million in the fourth quarter of 2019. The increase in marketing expenses was mainly due to our efforts to drive adoption of our mobile wallet services.

General and Administrative Expenses

Our general and administrative expenses increased by 72.3% to US$189.0 million in the fourth quarter of 2020 from US$109.7 million in the fourth quarter of 2019. This increase was primarily due to higher staff compensation and benefit costs as well as increase in office facilities and related expenses.

Research and Development Expenses

Our research and development expenses increased by 121.4% to US$109.5 million in the fourth quarter of 2020 from US$49.5 million in the fourth quarter of 2019, primarily due to the increase in research and development staff force.

Non-operating Income or Losses, Net

Non-operating income or losses consist of interest income, interest expense, investment gain (loss), fair value change for the 2017 convertible notes and foreign exchange gain (loss). We recorded a net non-operating loss of US$124.5 million in the fourth quarter of 2020, compared to a net non-operating loss of US$15.2 million in the fourth quarter of 2019. Our non-operating loss in the fourth quarter of 2020 was primarily due to investment loss arising mainly from the impairment of a private investment made in the prior years, and interest expense on convertible notes.

Income Tax Expense

We had a net income tax expense of US$44.2 million and US$36.0 million in the fourth quarter of 2020 and 2019, respectively. The income tax expense in the fourth quarter of 2020 was primarily due to corporate income tax and withholding tax expenses incurred by our digital entertainment segment.

Net Loss

As a result of the foregoing, we had net losses of US$524.6 million and US$281.9 million in the fourth quarter of 2020 and 2019, respectively.

Net Loss Excluding Share-based Compensation and Changes in Fair Value of the 2017 Convertible Notes

Net loss excluding share-based compensation and changes in fair value of the 2017 convertible notes, was US$430.7 million and US$240.2 million in the fourth quarter of 2020 and 2019, respectively.

Basic and Diluted Loss Per Share Based on Net Loss Excluding Share-based Compensation and Changes in Fair Value of the 2017 Convertible Notes Attributable to Sea Limited�s Ordinary Shareholders

Basic and diluted loss per share based on net loss excluding share-based compensation and changes in fair value of the 2017 convertible notes, was US$0.87 and US$0.53 in the fourth quarter of 2020 and 2019, respectively.

Full Year Ended December 31, 2020 Compared to Full Year Ended December 31, 2019

Revenue

Our total GAAP revenue increased by 101.1% to US$4.4 billion for the full year ended December 31, 2020 from US$2.2 billion for the full year ended December 31, 2019. The increase was mainly driven by the growth in each of the segments detailed as follows:

• Digital Entertainment: GAAP revenue increased by 77.5% to US$2.0 billion for the full year ended December 31, 2020 from US$1.1 billion for the full year ended December 31, 2019. This increase was primarily due to the increase in our active user base as well as the deepened paying user penetration, and in particular, the continued success of our self-developed game Free Fire.

• E-commerce and other services: GAAP revenue increased by 116.0% to US$1.8 billion for the full year ended December 31, 2020 from US$822.7 million for the full year ended December 31, 2019. This increase was primarily driven by the growth of our e-commerce marketplace, and positive developments in each of our marketplace revenue streams � transaction-based fees, value-added services, and advertising. It is a result of our commitment to continuously enhance our service offerings as we seek to create greater value for our platform users.

• Sales of goods: GAAP revenue increased by 168.7% to US$582.4 million for the full year ended December 31, 2020 from US$216.7 million for the full year ended December 31, 2019, primarily due to the increase in our product offerings.

Cost of Revenue

Our total cost of revenue increased by 92.7% to US$3.0 billion for the full year ended December 31, 2020 from US$1.6 billion for the full year ended December 31, 2019.

• Digital Entertainment: Cost of revenue increased by 61.1% to US$702.3 million for the full year ended December 31, 2020 from US$435.9 million for the full year ended December 31, 2019. The increase was largely in line with revenue growth in our digital entertainment business. Improvement in gross profit margins was largely due to higher revenue contribution from our self-developed game.

• E-commerce and other services: Cost of revenue for our e-commerce and other services segment combined increased by 92.1% to US$1.7 billion for the full year ended December 31, 2020 from US$907.5 million for the full year ended December 31, 2019. The increase was primarily due to higher expenses associated with our logistics and other value-added services that we provide to our users, and other costs incurred in line with the growth of our e-commerce marketplace. Improvement in gross profit margins was mainly due to take-rate growth as we continue to roll out tools to better serve our users� needs.

• Cost of goods sold: Cost of goods sold increased by 155.8% to US$580.7 million for the full year ended December 31, 2020 from US$227.0 million for the full year ended December 31, 2019. The increase was largely in line with the increase in our product offerings.

Other Operating Income

Our other operating income increased by 1,093.5% to US$189.6 million for the full year ended December 31, 2020 from US$15.9 million for the full year ended December 31, 2019. The increase in our other operating income was mainly due to the rebates from e-commerce related logistic services provided by third parties.

Sales and Marketing Expenses

Our total sales and marketing expenses increased by 88.

Contacts

For enquiries:
Investors / analysts: [email protected]
Media: Martin Reidy, [email protected]

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